Basic bank accounts are simple current accounts designed for those with a poor credit rating – we explore the pros and cons (Updated 9/7/09).
| Company | Package Name | Monthly fee | Benefits |
|---|
According to statistics from Credit Action (www.creditaction.org.uk), the total personal debt in the UK stood at a whopping £1,459 billion in July 2009, with one person being declared bankrupt or insolvent every 4.35 minutes.
Being in debt can be a nightmare, but even if you make it through to the other side, a bad credit history can haunt your past. Your credit rating can prevent you from being accepted for almost every financial product in the future, even a bank’s standard current account, because the credit check is a standard way to assess customers.
If you have poor credit history and have been refused a standard current account following a credit check, then a basic bank account could be for you.
Check your credit report online
Basic bank accounts are simple current accounts that are designed for managing day-to-day money. They offer fewer features than a standard current account and don’t allow overdrafts.
All basic bank accounts provide you with a cash machine card (which will allow you to withdraw cash from ATMs) and some may provide you with a debit card (either Solo, Electron or Maestro, with which you can pay for items).
Basic bank accounts are available to almost everybody. They are often favoured by people with a poor credit history who have been unable to open a standard current account due to the results of their credit check. The bank or building society may want to check your credit history when you apply for an account, but even if you have CCJs or have been made bankrupt, you may still be able to open an account.
The following table shows a selection of the best basic bank accounts available on the high street. All of these accounts accept Automated Credit Transfer (ACT) payments, provide a cash machine card and allow withdrawals at the Post Office. None of them require a minimum amount to open an account except Nationwide, which requires £1.
| Provider | Package name | Debit card | Free buffer zone | Charge for unpaid direct debit |
| Halifax / Bank of Scotland | Easycash | ![]() |
£10 | £15 |
| Lloyds TSB | Cash Account | ![]() |
£10 | £20 |
| Co-operative Bank | Cashminder | ![]() |
![]() |
£19.50* |
| HSBC | Basic Bank Account | ![]() |
£10 | No* |
| Natwest | Step Account | ![]() |
![]() |
£38** |
| Royal Bank of Scotland | Key Account | ![]() |
![]() |
£38** |
| Yorkshire Bank | Readycash | ![]() |
![]() |
£35 |
| Barclays | Cash Card Account | ![]() |
![]() |
£15 |
| Alliance and Leicester | Basic Cash Account | ![]() |
![]() |
£25 |
| Nationwide | Flex Cash Card | ![]() |
![]() |
£30 |
Source: FSA Money Made Clear (www.moneymadeclear.fsa.gov.uk). Table correct as of April 2009.
*The account may be closed if a direct debit is refused three times
**The bank may cancel direct debits if you don’t have enough to pay them on more than one occasion.
If you are not accepted for these high street basic bank accounts due to the severity of your credit history, then you may want to consider the One Banking Account. You can open an account with One Banking without any credit checks at all and they claim that they “certainly won’t turn you away due to any aspect of your previous financial history”. This account can be managed online, by text or over the phone and will cost you £12.50 per month plus a one-off opening fee of £30.
This is pricey, but if you have exhausted all other options, it may be worth it. You will get your own account manager who will help you manage your money and who will set aside the money needed for all your regular outgoings including bills, payments and standing orders. Any money left from your salary can then be transferred onto a prepaid MasterCard which you can use for everyday spending in shops and online.
| Company | Package Name | Monthly fee | Benefits |
|---|
Basic bank accounts may be your only option if you have a poor credit history and although limited, there are still many benefits to these accounts. Furthermore, if you use your account properly and prove your reliability to your bank, you may be able to upgrade to a standard current account at a later date.
Top Tip – If possible, pay your income straight into your basic bank account. This will improve your chances greatly if you ask the bank for an upgrade at a later date.
Top Tip - If you have a bad credit history or are struggling with debts you can get help and advice from organisations like the Consumer Credit Counselling Service (www.cccs.co.uk), National Debtline (www.nationaldebtline.co.uk) and the Citizens’ Advice Bureaux (www.citizensadvice.org.uk).
| Company | Package Name | Monthly fee | Benefits |
|---|
| Bookmark with: |
|
|
|
|
|
|
|
|
|
|
|
|
![]() |
What's this? |
Comments